EDITOR'S NOTE: Russia’s shift away from the dollar and the euro was an anticipated consequence of Western sanctions. The point was to cut Russia off from most of the global economy. Though Russia began de-dollarizing its reserves long before its invasion of Ukraine, sanctions from the west forced Russia to de-dollarize, aiming to corner the “rogue nation” into a disadvantageous and isolated monetary position. Instead, China tossed Russia a lifeline in the form of a yuan-ruble-gold exchange while their trading partners began trading in yuan and rubles in place of dollars and euros. In short, the global economy is beginning to bifurcate and the dollar’s dominance along with the West’s unipolar position is now under threat.
Half of the country’s external transactions are now being made in other currencies.
The share of the US dollar and the euro in Russia’s cross-border payments has fallen by more than a third since the beginning of the year, from 79% to about 50%, the country’s Central Bank announced this week.
While the bulk of export and import settlements remain in dollars and euros, these payments are hampered by sanctions, as many Russian banks have been disconnected from the Western financial messaging system, SWIFT, and are now unable to carry out certain transactions.
The use of China’s yuan by Russian businesses has increased dramatically in the past nine months as Moscow seeks to reduce its reliance on Western currencies. But to arrange payments in alternative currencies, a new infrastructure for foreign exchange operations has to be established, the regulator said.
The share of the yuan in the volume of Russian currency trading surged from 3% in March to 33% in November, according to the Central Bank. The regulator explained that market players “not only purchased yuan for rubles, but also transferred part of the funds from dollars and euros” into Chinese currency.
The two countries have reportedly accelerated efforts to move away from the US dollar and the euro, towards settlements using domestic currencies.
The monthly volume of trading in the currencies of other so-called “friendly” nations rose more than sixfold from 6.5 billion rubles ($100 million) in March to 39.4 billion rubles ($640 million) in September.
Originally published on RT.
